James A. Kostohryz

Menu

Hayek In Perspective: An Interview

Below I am enclosing a two-part audio in which I was interviewed on the the subject of austrian economist Friedrich Hayek.

Please beware that this interview is mainly of intellectual interest rather than any specific investment importance. Still I thought that some of you might find the subject interesting which is why I have decided to share it with you.

Please feel free to ignore these audio recordings if you have no special interest in Friedrich Hayek. For those of you that may have an interest in Friedrich Hayek, I hope you enjoy it!

Hayek is probably one of the most important economic thinkers of all times, with a deep understanding of economy. I think you could call him: the “Einstein of economics”. I love reading his work allthough some is very advanced and hard to follow (swallow-). A true scientist, scolar-
Fantastic interview………more…………..more, please!! –

I’m glad you felt that there was some clarity. I was actually quite afraid that the interview was not going to work well because the ground covered was so vast. When you are covering so much ground, its hard not to wander around in a way that decreases clarity.

As it is, I think I made that mistake a few times — I moved from one subject to the next without fully having fully articulated the prior point. I probably also missed the opportunity to articulate a couple of points that would have connected some dots in between.

James,
What an excellent interview. When I read Constitution of Liberty I realized what a giant Hayek was. You have provided a great overview that has deepened my appreciation for him. Thank God he is generally well respected.
I noted your comments with respect to ETFs in the commodities space and their perhaps inappropriateness as speculative venues. While I am not knowledgeable about ETFs and their impact on commodity market liquidity, I will defend the Futures market, which has a high component of speculation. This speculation provides essential liquidity; I suspect you would agree.
I underwrite risk in the derivatives market. I would say that liquidity does not eliminate volatility but LACK of liquidity brings wide bid-ask spread and greater volatility. Liquid futures markets tend to take a price where it will go with less disruption than without it; although overshooting is common.

I entirely agree that futures and futures speculators in particular provide valuable liquidity to the market – and that this, in turn, dampens volatility. Having said that, I think that it is healthy for commodities markets to have a balance between commercial and speculative participants. I believe that commodity ETFs have probably tipped this balance in a disfavorable way and have created distortions. Still, I understand that this is a controversial issue and it is not easy to draw the right lines.

Thank you James,
for your comments. I have no doubt that the (commodity) ETF market can easily become (is) imbalanced. This, because of access from any level investor/trader and the influence of popular press. I have been cringing for several years as Jim Rogers has minimized a multi year down trend in commodities as a temporary correction; continually repeating his mantra that production is way behind consumption. And I doubt ETFs contribute to liquidity in commodities. Even the futures market can get imbalanced but at least there are market-makers, dealers and exchanges that form a backstop; and the players know the territory … or at least they should. Cheers